January 2023 Market Review & Commentary
We hope this email finds you with the same excitement as I have, to “turn the page” into this new year. As I highlighted in my last month's ending report, we are continuing our journey through one of the most interesting periods of times since we began navigating the Covid 19 Pandemic in March of 2020. The last 33 months have had a roller coaster-like effect for both the financial markets and everyday life. Like many of you are experiencing, our family continues to move back to some form of normality, and we hope that as each passing month we move closer to a stabilization.
The markets seemed to embrace my same optimistic feeling of “turning the page” in January as all the major Stock Indexes finishing positive for the month after December left a dismal taste in everyone’s mouth. We saw the Dow Jones Industrial Index finish out the month positive +2.9% and the S&P500 climbed to a +6.3% return. These robust gains were driven from a multitude of data points and key economic improvements:
· We saw the sixth consecutive month of cooling inflation data with the headline consumer price index (CPI) dropping to 6.5% from 7.1% mainly due to energy and food cost receding.
· We saw a stronger-than-expected GDP growth figure of 2.9% for the 4th quarter.
· The jobs market/ employment data has continued to show its resiliency with the weekly jobless claims tracking at its lowest level since April
· The announcement of China’s change on Covid 19 policy to allow for travel and a move back to regular commerce
As we discussed in last month’s summary, everyone’s focus is on whether we are moving into a recessionary period vs. the potential of soft landing. With the rate of interest rate increases slowing, inflation continuing to slowly wane, and employment data holding strong, January certainly was in the soft-landing camp. This was clearly illustrated by the way the Technology Sector reacted to all the headline news and enjoyed a revelation of sorts. We saw many of the large tech names, chip makers, speculative names and financial technology names have a strong start to the year while traditionally defensive areas of utilities, consumer staples and healthcare finished the month of January in negative territory. This type of rotation leaves all investors with the same hesitancy that is becoming an almost Groundhog Day like feeling of saying.... “is this for real” or is this just another unjustified bounce of optimistic exuberance. Only time will tell and until then, we will be watching closely the bond market moves, economic indicators, employment data, the Federal Reserve posturing and company financial reporting.